Investing and Altruism – How to donate tax-effectively

By Carl Spiess

Canada is seeing a rise in charitable giving. The Tsunami 20 months ago, and recent news of Bill Gates' and
Warren Buffet's major donations are spurring ordinary Canadians to continue the trend of the last few years which
has seen ever increasing donation amounts. Canadians, it seems, are a generous bunch and are pleased to be able to
share their good fortune with others. Now, more than one in four Canadians make some kind of charitable donation,
and for those who do donate, new tax rules can really help to reduce the cost of donating.

With the recent May 2, 2006 federal announcement that capital gains tax has been eliminated on the donation of
securities (e.g. stocks and funds) to charities, many clients are rethinking their approach to charitable giving.
If you are planning on making a significant donation to a charity this year, please contact us for information
about how to use securities from your non-registered investment account to avoid paying a (future) capital gain.

For example, if you were planning on giving $2,000 to your favourite charity at year end, and were going to
write a cheque or donate shares, you would receive a significant $920 tax break on your income tax for the donation.
(Assuming 46% tax bracket and first $200 in donations are already made). But if you had to sell securities with a
zero or very low cost base (say from an insurance demutualization), to raise the $2,000 you wind up paying around
$460 in tax, and thus only net $460 in tax savings. If you instead donate those shares directly, there would be
no capital gains, and we could re-invest the same $2,000 cash that you were going to donate, back in your investment
account, investing in similar securities with a new higher cost base, thus reducing your potential future gains taxes due.

If you are looking at doing more than a single donation, there are also new options for setting up a foundation
through a Charitable Giving Fund. Mackenzie has introduced an innovative program. The web site provides a good
overview of the concept, the process and all the features that make the Charitable Giving Fund the 1st of its kind
in Canada.

In the end, the less it costs you to donate the more you can afford to help your favourite charities. When planning
for your charitable giving, please give us a call. We would be pleased to help you structure your donations to make
them as tax-effective as possible. It makes us feel good, too!

More on charitable giving and taxes

CI Canadian Investment Fund Manager Change

The longest running Canadian investment fund, the 73 year-old CI Canadian Investment Fund has announced a
major manager change. Daniel Bubis will be taking over the management of CI Canadian Investment Fund after a 60 day
transition from former manager Kim Shannon who did an excellent job of running the fund for many years. Kim is
moving to run Canadian investments at Brandes Investments Partners, who are known for their international investing
but whose Canadian offerings have been lagging. We will be watching the new manager carefully, and advising if we
will recommend clients follow Kim or stay in the CI Canadian Investment Fund which has had many managers over the
years and has averaged 9% a year since November 16, 1932.

More on CI Canadian Investment Fund

CI Funds' announcement

Canada Newswire

Templeton Growth Fund Manager Change Update

At Templeton's annual meeting this June, it was announced that Lisa Myers is taking over as the manager of
Templeton Growth Fund. George Morgan, who managed the 52 year-old fund since 2000, is leaving the Nassau-based
fund company to return to Canada for personal reasons.

As with the previous manager changes on this fund, we will be watching the transition, and letting clients know
if we have any concerns. At present, there have only been encouraging signs, with performance continuing to be
first quartile over the last 1, 3 and 6 months to September 30, 2006.

Helped by its relatively low Management fee, the fund continues to easily outperform both its peers and the
index, and we continue to have it as a core recommended fund.

More on Templeton Growth Fund

RBC Capping O'Shaughnessy Canadian Equity Fund In January

RBC Asset Management has announced that it will close the RBC O'Shaughnessy Canadian Equity Fund to new
purchases in January, 2007. The excellent performing fund has rapidly grown to 2 Billion in assets, and
(for certain clients) we have been a fan of the various funds Jim O'Shaughnessy has run.

As with other fund closures we have seen over the years, this is usually a good thing for current unitholders,
as it allows the manager to continue a successful strategy with a manageable portfolio size.

The first time I attended one of Jim O'Shaughnessy's investment presentations, around
5 years ago, I was the only non-RBC advisor there. So in case you are wondering, yes, we like to know about and
have available to you the best funds and, if we like a fund, even from another bank, we are happy to let you know about it.

More on RBC O'Shaughnessy Canadian Equity Fund

Morningstar's analysis

RBC press release

Canada Savings Bonds and Alternatives

November 1st is the annual renewal day for Canada Savings Bonds. Rates, unfortunately, are not worth getting
excited about. The regular bond is posted at 3% and rates work out 3.24% compounded over 3 years with the premium
bond.

In addition to CSBs, your account at ScotiaMcLeod offers Guaranteed Investment Certificates from 8 issuers,
and since as brokers we can shop for the best rate, you will always do better than dealing just with a bank or
trust company. Rates for 1-5 year GICs are all over 4%, please contact us for exact rates, as they change daily.

More on Canada Savings Bonds and alternatives

Recommended Reading: Income Trusts and Ottawa

Addendum: The federal government's announcement on Wednesday, November 1, 2006 obviously did not take the
recommendations of the article mentioned, below. We expect the markets to continue to adjust to this new taxation
which fortunately, does not take effect until 2011. There was some good news about spousal income splitting though,
that takes effect next year. ScotiaMcLeod and Scotiabank's comments are provided below.

With the pending conversion of BCE into an income trust, there are many questions about the taxation of
income trusts and the future for that sector. Our recommended reading this month is an article from KBSH
investment management about what the current furor about income trusts is all about.

Change of Morningstar Fund Categories

Effective this month, Morningstar has changed the categories
that you may have become accustomed to using when searching and ranking funds. For example, there is no longer an
Income Trust category, as so many regular equity funds now include trusts, and they were never really a separate
asset class. Some category names we will need to get used to: Canadian Anchored Equity, Canadian Equity Tilt,
Portfolio, Canadian Core Fixed Income, and 15+ Year Target Date Portfolio. We will be reviewing our public fund
performance categories and data tables on in the coming months, and in the meantime, your secure online information
at ScotiaOnline uses the new Morningstar
categories.

More on Morningstar fund categories

For more information on the benefits of securities donations, we recommend the Mackenzie Financial web site.
There are also some useful financial planning tools that help calculate the after-tax effect of donating
securities and/or flow through shares. They also have information on their new Charitable Foundation program.

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The Spiess McGlade Team is a personal trade name of Carl Spiess and Allan McGlade.